What changed in this filing

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Item 1. Financial Statements

2025-05-05 compared with 2025-02-03 · 209 added, 179 removed, 696 unchanged (36% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

December 31, 2024

March 31, 2025

June 30, 2024

4 unchanged sentences

Marketable securities

Accounts receivable, net of allowance for credit losses of $ 20 and $ 32 as of December 31, 2024 and June 30, 2024, respectively

Accounts receivable, net of allowance for credit losses of $ 20 and $ 32 as of March 31, 2025 and June 30, 2024, respectively

Income tax receivable

18 unchanged sentences

Common Stock, par value $ 0.01 per share;

100,000,000 shares authorized as of December 31, 2024 and June 30, 2024;

100,000,000 shares authorized as of March 31, 2025 and June 30, 2024;

39,771,035 and 39,768,186 shares issued;

2 unchanged sentences

Retained earnings

Treasury Stock, at cost ( 3,369,614 and 2,893,715 shares as of December 31, 2024 and June 30, 2024, respectively)

Treasury Stock, at cost ( 4,114,614 and 2,893,715 shares as of March 31, 2025 and June 30, 2024, respectively)

Accumulated other comprehensive income

5 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three Months ended December 31,

Three Months ended March 31,

(in thousands, except for share and per share data)

18 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Six Months Ended December 31,

Nine Months Ended March 31,

(in thousands, except for share and per share data)

19 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

Three Months ended December 31,

Six Months Ended December 31,

Three Months ended March 31,

Nine Months Ended March 31,

Other comprehensive income, net of tax

Net change in unrealized gains on available-for-sale debt securities, net of taxes of $ 7

Net change in unrealized gains on available-for-sale debt securities, net of taxes of $ 13 and $ 20 , respectively

Other comprehensive income, net of tax

3 unchanged sentences

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (unaudited)

Six months ended December 31, 2024 (in thousands, except for share data)

Nine months ended March 31, 2025 (in thousands, except for share data)

Treasury Stock

10 unchanged sentences

Stock-based compensation expense

Stock options exercised

Purchase of treasury shares

2 unchanged sentences

( 3,369,614 )

Six months ended December 31, 2023 (in thousands, except share data)

Other comprehensive income, net of tax

Stock-based compensation expense

Purchase of treasury shares

Cash dividend ( $ .125 per share)

Balances at March 31, 2025

( 4,114,614 )

Nine months ended March 31, 2024 (in thousands, except share data)

Treasury Stock

11 unchanged sentences

( 2,893,715 )

Stock-based compensation expense

Stock options exercised

Cash dividend ( $ .10 per share)

Balances at March 31, 2024

( 2,893,715 )

See accompanying notes to condensed consolidated financial statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

Six Months ended December 31,

Nine Months ended March 31,

(in thousands)

37 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

December 31, 2024

March 31, 2025

NOTE 1 - Nature of Business and Summary of Significant Accounting Policies

3 unchanged sentences

These products are used for commercial, residential, institutional, industrial and governmental applications, and are sold worldwide principally to independent distributors, dealers and installers of security equipment.

We have experienced significant growth in recent years, primarily driven by our recurring service revenues generated from wireless communication services for intrusion and fire alarm systems, as well as our school security products that are designed to meet the increasing needs to enhance school security as a result of on-campus shooting and violence in the U.S.

Basis of Presentation:

The accompanying unaudited Condensed Consolidated Financial Statements of Napco Security Technologies, Inc.

(Napco) have been prepared in accordance with U.S.

GAAP as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification 270 for interim financial information and with the instructions to Rule 10-01 of Securities and Exchange Commission Regulation S-X.

Accordingly, they do not include all of the information and footnotes required by U.S.

GAAP for complete financial statements.

Therefore, the interim condensed consolidated financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in the Annual Report on Form 10-K for the year ended June 30, 2024.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included.

All such adjustments are of a normal, recurring nature.

Significant Accounting Policies :

11 unchanged sentences

The methods and assumptions used to estimate the fair value of the following classes of financial instruments were:

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of December 31, 2024 and June 30, 2024 due to their short-term maturities.

Current Assets and Current Liabilities - The carrying amount of cash and cash equivalents, certificates of deposits, marketable securities, current receivables and payables and certain other short-term financial instruments approximate their fair value as of March 31, 2025 and June 30, 2024 due to their short-term maturities.

Cash and Cash Equivalents and Investments – other

4 unchanged sentences

Certificate of deposits with an original maturity greater than three months are classified as Investments – other.

Cash and cash equivalents include approximately $ 74,620,000 of short-term time deposits, consisting of money market funds totaling $ 72,095,000 and $ 2,525,000 of U.S.

treasury securities as of December 31, 2024.

Cash and cash equivalents include approximately $ 46,518,000 of short-term time deposits, consisting of certificates of deposit totaling $ 5,402,000 and $ 41,116,000 in a money market

fund as of June 30, 2024.

Cash and cash equivalents include approximately $ 59,685,000 of short-term time deposits money market funds as of March 31, 2025.

Cash and cash equivalents include approximately $ 46,518,000 of short-term time deposits, consisting of certificates of deposit totaling $ 5,402,000 and $ 41,116,000 in a money market fund as of June 30, 2024.

The Company classifies these highly liquid investments with original maturities of three months or less as cash equivalents.

1 unchanged sentence

Cash and cash equivalents consist of the following as of (in thousands):

December 31, 2024

March 31, 2025

June 30, 2024

Money Market Fund

Treasury Securities

Certificate of Deposits

Investments-other consists of the following as of (in thousands):

December 31, 2024

March 31, 2025

June 30, 2024

1 unchanged sentence

Certificates of deposit are recorded at the original cost plus accrued interest.

There were no certificate of deposits outstanding at December 31, 2024.

There were no certificate of deposits outstanding at March 31, 2025.

The Company’s certificates of deposits as of June 30, 2024 consist of the following (in thousands):

8 unchanged sentences

7/25/2024 - 10/24/2024

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of December 31, 2024 and June 30, 2024.

The Company has cash balances in banks in excess of the maximum amount insured by the FDIC and other international agencies as of March 31, 2025 and June 30, 2024.

The Company has not historically experienced any credit losses with balances in excess of FDIC limits.

6 unchanged sentences

In addition, specific adverse conditions are considered related to the financial health of, and business outlook for, the investee.

If the Company plans to sell the security or it is more likely than not that the Company will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established.

charge in other income (expense), net and a new cost basis in the investment is established.

If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

1 unchanged sentence

Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative).

The Company performs a qualitative assessment on a periodic basis and

recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

The Company performs a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.

Changes in value are recorded in other income (expense), net.

Accounts Receivable

Accounts receivable is stated net of the reserves for credit losses of $ 20,000 and $ 32,000 as of December 31, 2024 and June 30, 2024, respectively.

Accounts receivable is stated net of the reserves for credit losses of $ 20,000 and $ 32,000 as of March 31, 2025 and June 30, 2024, respectively.

In accordance with ASU No.

25 unchanged sentences

costs of major renewals and improvements are capitalized.

At the time property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

At the time property and equipment are retired or

otherwise disposed of, the cost and accumulated depreciation are eliminated from the asset and accumulated depreciation accounts and the profit or loss on such disposition is reflected in income.

Depreciation is recorded over the estimated service lives of the related assets using primarily the straight-line method.

4 unchanged sentences

Intangible assets consisted of the follows (in thousands):

December 31, 2024

March 31, 2025

June 30, 2024

Customer relationships

Amortization expense for intangible assets subject to amortization was approximately $ 79,000 and $ 84,000 for the three months ended December 31, 2024 and 2023, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 157,000 and $ 168,000 for the six months ended December 31, 2024 and 2023, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 79,000 and $ 84,000 for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense for intangible assets subject to amortization was approximately $ 236,000 and $ 253,000 for the nine months ended March 31, 2025 and 2024, respectively.

Amortization expense for each of the next five fiscal years is estimated to be as follows:

4 unchanged sentences

and 2030 - $ 202,000 .

The weighted average remaining amortization period for intangible assets was 14.4 years and 14.8 years at December 31, 2024 and June 30, 2024, respectively.

The weighted average remaining amortization period for intangible assets was 14.3 years and 14.8 years at March 31, 2025 and June 30, 2024, respectively.

Revenue Recognition

18 unchanged sentences

Shipping and Handling Sales and Costs

The Company records the amount billed to customers for shipping and handling in net sales ($ 80,000 and $ 103,000 in the three months ended December 31, 2024 and 2023, respectively, and $ 170,000 and $ 186,000 in the six months ended December 31, 2024 and 2023, respectively);

and classifies the costs associated with these sales in cost of sales ($ 353,000 and $ 389,000 in the three months ended December 31, 2024 and 2023, respectively and $ 743,000 and $ 760,000 in the six months ended December 31, 2024 and 2023, respectively).

The Company records the amount billed to customers for shipping and handling in net sales ($ 91,000 and $ 93,000 in the three months ended March 31, 2025 and 2024, respectively, and $ 261,000 and $ 279,000 in the nine months ended March 31, 2025 and 2024, respectively);

and classifies the costs associated with these sales in cost of sales ($ 330,000 and $ 421,000 in the three months ended March 31, 2025 and 2024, respectively and $ 1,073,000 and $ 1,181,000 in the nine months ended March 31, 2025 and 2024, respectively).

Advertising and Promotional Costs

Advertising and promotional costs are included in "Selling, General and Administrative" (“SG&A”) expenses in the consolidated statements of income and are expensed as incurred.

Advertising expense for the three months ended December 31, 2024 and 2023 was $ 916,000 and $ 696,000 , respectively.

Advertising expense for the six months ended December 31, 2024 and 2023 was $ 1,806,000 and $ 1,457,000 , respectively.

Advertising expense for the three months ended March 31, 2025 and 2024 was $ 526,000 and $ 395,000 , respectively.

Advertising expense for the nine months ended March 31, 2025 and 2024 was $ 2,332,000 and $ 1,852,000 , respectively.

Research and Development Costs

6 unchanged sentences

The Company measures and recognizes the tax implications of positions taken or expected to be taken in its tax returns on an ongoing basis.

The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step process in which (1) we determine whether it is more likely than not that the tax positions will be sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

more-likely-than-not recognition threshold, we recognize the largest amount of tax benefit that is more than 50 percent likely to be realized upon ultimate settlement with the related tax authority.

Treasury Stock

3 unchanged sentences

When treasury stock is re-issued at a price higher than its cost, the increase is recorded in additional paid-in capital on the Consolidated Balance Sheets.

treasury stock is re-issued at a price lower than its cost, the decrease is recorded in additional paid-in capital to the extent that there are previously recorded increases to offset the decrease.

When treasury stock is re-issued at a price lower than its cost, the decrease is recorded in additional paid-in capital to the extent that there are previously recorded increases to offset the decrease.

Any decreases in excess of that amount are recorded in retained earnings on the Consolidated Balance Sheets.

2 unchanged sentences

Diluted net income per common share (Diluted EPS) is computed by dividing net income by the weighted average number of common shares and dilutive common share equivalents and convertible securities then outstanding.

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended December 31, 2024 and 2023 (in thousands, except share and per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the three months ended March 31, 2025 and 2024 (in thousands, except share and per share data):

Weighted Average Shares

2 unchanged sentences

Stock Options

Options to purchase 120,000 and 67,500 shares of common stock were excluded for the three months ended December 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Options to purchase 125,000 and 0 shares of common stock were excluded for the three months ended March 31, 2025 and 2024, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

The following provides a reconciliation of information used in calculating the per share amounts for the six months ended December 31, 2024 and 2023 (in thousands, except share and per share data):

The following provides a reconciliation of information used in calculating the per share amounts for the nine months ended March 31, 2025 and 2024 (in thousands, except share and per share data):

Net Income per

2 unchanged sentences

Stock Options

Options to purchase 70,000 and 36,250 shares of common stock were excluded for the six months ended December 31, 2024 and 2023, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

Options to purchase 88,333 and 24,167 shares of common stock were excluded for the nine months ended March 31, 2025 and 2024, respectively, and were not included in the computation of Diluted EPS because their inclusion would be anti-dilutive.

These options were still outstanding at the end of the period.

7 unchanged sentences

Determining the fair value of share-based awards at the grant date requires assumptions and judgments about expected volatility, among other factors.

Stock-based compensation costs of $ 386,000 and $ 303,000 were recognized for the three months ended December 31, 2024 and 2023, respectively.

Stock-based compensation costs of $ 757,000 and $ 610,000 were recognized for the six months ended December 31, 2024 and 2023, respectively.

Stock-based compensation costs of $ 386,000 and $ 266,000 were recognized for the three months ended March 31, 2025 and 2024, respectively.

Stock-based compensation costs of $ 1,143,000 and $ 876,000 were recognized for the nine months ended March 31, 2025 and 2024, respectively.

Foreign Currency

2 unchanged sentences

The day-to-day operations of all foreign subsidiaries are dependent on the economic environment of the U.S.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three and six months ended December 31, 2024 or 2023.

Therefore, no realized and unrealized gains and losses associated with foreign currency translation are recorded for the three and nine months ended March 31, 2025 or 2024.

Segment Reporting

37 unchanged sentences

Sales to unaffiliated customers are primarily shipped from the United States.

As of December 31, 2024 and June 30, 2024, the Company included refund liabilities of approximately $ 4,814,000 and $ 6,295,000 , respectively, in current liabilities.

As of December 31, 2024 and June 30, 2024, the Company included return-related assets of approximately $ 1,263,000 and $ 1,586,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 4 % and 6 % for the three months ended December 31, 2024 and 2023, respectively.

As a percentage of gross sales, returns, rebates and allowances were 7 % and 5 % for the six months ended December 31, 2024 and 2023, respectively.

As of March 31, 2025 and June 30, 2024, the Company included refund liabilities of approximately $ 4,973,000 and $ 6,295,000 , respectively, in current liabilities.

As of March 31, 2025 and June 30, 2024, the Company included return-related assets of approximately $ 1,215,000 and $ 1,586,000 , respectively, in other current assets.

As a percentage of gross sales, returns, rebates and allowances were 6 % for both the three months ended March 31, 2025 and 2024, respectively.

As a percentage of gross sales, returns, rebates and allowances were 7 % and 6 % for the nine months ended March 31, 2025 and 2024, respectively.

The Company disaggregates revenue from contracts with customers into major product lines.

2 unchanged sentences

Following is the disaggregation of revenues based on major product lines (in thousands):

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Major Product Lines:

5 unchanged sentences

Such risks of loss manifest themselves differently, depending on the nature of the concentration, and vary in significance.

The Company had two customers with an accounts receivable balance that comprised of 11 % and 13 % as of December 31, 2024.

These same two customers had an accounts receivable balance that comprised of 17 % and 12 % as of June 30, 2024.

The Company had one additional customer with an accounts receivable balance that comprised of 13 % as of December 31, 2024.

Sales to any of these customers did not exceed 10% of net sales during the three or six months ended December 31, 2024 and 2023, respectively.

The Company had two customers that comprised of 16 % and 13 % of the accounts receivable balance as of March 31, 2025.

The Company had two customers that comprised of 17 % and 12 % of the accounts receivable balance as of June 30, 2024.

Sales to any customers did not exceed 10% of net sales during the three or nine months ended March 31, 2025 and 2024, respectively.

NOTE 4 – Fair Value Measurement

5 unchanged sentences

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources.

The Company has evaluated the estimated fair value of financial instruments using available market information and

valuations as provided by third-party sources.

The use of different market assumptions or estimation methodologies could have a significant effect on the estimated fair value amounts.

The following table presents the Company’s assets that were measured at fair value on a recurring basis at December 31, 2024 and June 30, 2024, respectively:

December 31, 2024

The following table presents the Company’s assets that were measured at fair value on a recurring basis at March 31, 2025 and June 30, 2024, respectively:

March 31, 2025

Cash equivalents

11 unchanged sentences

The Company’s investments classified as Level 1 are based on quoted prices that are available in active markets, as well as certificates of deposits and time deposits that are classified as Level 1 due to their short-term nature.

For the three and six months ending December 31, 2024 and 2023, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

For the three and nine months ending March 31, 2025 and 2024, there were no transfers between Levels 1 and 2 investments and no transfers in or out of Level 3.

NOTE 5 – Marketable Securities

A summary of the fair value of the Company’s investment in marketable securities as of December 31, 2024 and June 30, 2024 is as follows:

December 31, 2024

A summary of the fair value of the Company’s investment in marketable securities as of March 31, 2025 and June 30, 2024 is as follows:

March 31, 2025

June 30, 2024

2 unchanged sentences

Investments in Equity Securities

The disaggregated net gains and losses on the equity securities recognized within the accompanying condensed consolidated statements of income for the three and six months ended December 31, 2024 and 2023, are as follows (in thousands):

Three months ended December 31,

Six months ended December 31,

The disaggregated net gains and losses on the equity securities recognized within the accompanying condensed consolidated statements of income for the three and nine months ended March 31, 2025 and 2024, are as follows (in thousands):

Three months ended March 31,

Nine months ended March 31,

Net gains recognized during the period on equity securities

Net income (losses) recognized during the period on equity securities sold during the period

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date

The following tables summarize the Company’s investments in equity securities at December 31, 2024 and June 30, 2024, respectively (in thousands):

December 31, 2024

The following tables summarize the Company’s investments in equity securities at March 31, 2025 and June 30, 2024, respectively (in thousands):

March 31, 2025

June 30, 2024

3 unchanged sentences

The Company had no investment in debt securities at June 30, 2024.

The following tables summarize the Company’s investments in debt securities at December 31, 2024 (in thousands):

The following tables summarize the Company’s investments in debt securities at March 31, 2025 (in thousands):

Amortized Cost

3 unchanged sentences

Treasury Securities

Included in Cash and cash equivalents

Included in Marketable securities

The debt investments all mature within one year or less, and the Company did not recognize any credit or non-credit related losses related to its debt securities during the three and six months ended December 31, 2024.

NOTE 6 - Inventories

5 unchanged sentences

Classification of inventories:

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 4,800,000 and $ 5,026,000 as of December 31, 2024 and June 30, 2024, respectively.

The reserve for excess and slow-moving inventory, which reduces inventory in our consolidated balance sheets were $ 5,139,000 and $ 5,026,000 as of March 31, 2025 and June 30, 2024, respectively.

NOTE 7 – Property, Plant, and Equipment

Property, plant and equipment consist of the following (in thousands):

December 31, 2024

March 31, 2025

June 30, 2024

6 unchanged sentences

accumulated depreciation and amortization

Depreciation and amortization expense on property, plant, and equipment was approximately $ 506,000 and $ 467,000 for the three months ended December 31, 2024 and 2023, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 976,000 and $ 920,000 for the six months ended December 31, 2024 and 2023, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 493,000 and $ 454,000 for the three months ended March 31, 2025 and 2024, respectively.

Depreciation and amortization expense on property, plant, and equipment was approximately $ 1,469,000 and $ 1,374,000 for the nine months ended March 31, 2025 and 2024, respectively.

NOTE 8 - Income Taxes

3 unchanged sentences

In addition, changes in judgment from the evaluation of new information resulting in the recognition de-recognition or re-measurement of a tax position taken in a prior annual period is recognized separately in the quarter of the change.

For the six months ended December 31, 2024 the Company recognized total pre-tax book income of $ 25,092,000 , comprised of $ 4,306,000 and $ 20,786,000 of domestic and foreign pre-tax book income, respectively.

For the nine months ended March 31, 2025 the Company recognized total pre-tax book income of $ 37,100,000 , comprised of $ 5,325,000 and $ 31,775,000 of domestic and foreign pre-tax book income, respectively.

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense and accrued income taxes.

As of December 31, 2024, the Company had accrued interest totaling $ 229,000 , as well as $ 754,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the six months ended December 31, 2024, additional tax liability and interest expense were accrued for in the amount of $ 54,000 and $ 35,000 , respectively.

As of March 31, 2025, the Company had accrued interest totaling $ 268,000 , as well as $ 754,000 of unrecognized net tax benefits that, if recognized, would favorably affect the Company’s effective income tax rate in any future period.

For the nine months ended March 31, 2025, additional tax liability and interest expense were accrued for in the amount of $ 54,000 and $ 50,000 , respectively.

The company has FIN 48 liabilities accrued due to historic Section 956 positions.

3 unchanged sentences

income tax return and tax returns in certain state and local and foreign jurisdictions.

As of December 31, 2024, fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations.

As of March 31, 2025, fiscal years 2021 and forward are still open for examination, in addition to fiscal year 2018, which is subject to a six year statute of limitations.

In addition, the Company has a wholly-owned subsidiary which operates in a Free Zone in the Dominican Republic (“DR”) and is exempt from DR income tax.

In December 2022, the Company received a letter from the IRS (“IRS”) notifying it that the IRS has closed its examination of the Company’s income tax return for fiscal year ended June 30, 2020.

There has been no changes proposed in relation to this examination.

NOTE 9 - Long-Term Debt

2 unchanged sentences

The Amended Agreement also increases the available revolving credit line from $ 11,000,000 to $ 20,000,000 and replaces the LIBOR benchmark rate with the Secured Overnight Financing Rate (SOFR) benchmark rate.

As of December 31, 2024 and June 30, 2024, the Company has no outstanding debt.

As of March 31, 2025 and June 30, 2024, the Company has no outstanding debt.

The Amended Agreement provides for a SOFR-based interest rate option of SOFR plus 1.2645 % to 1.3645 %, depending on the Fixed Charge Coverage Ratio, which is to be measured and adjusted quarterly, a prime rate-based interest rate option of the prime rate, as defined in the Amended Agreement, and other terms and conditions as more fully described in the Amended Agreement.

3 unchanged sentences

The Amended Agreement contains various restrictions and covenants including, but not limited to, compliance with certain financial rations, restrictions on payment of dividends and restrictions on borrowings.

During Fiscal 2020, the Company received the proceeds of promissory notes (the "PPP Loan Agreement"), entered into between the Company and HSBC Bank USA N.A., as lender (the "Lender).

The Lender made the loans pursuant to the Paycheck Protection Program (the "PPP"), created by Section 1102 of the CARES Act.

Pursuant to the PPP Loan Agreement, the Lender made loans to the Company with an aggregate principal amount of $ 3,904,000 (the "PPP Loan").

The PPP Loan and related extinguishment was accounted for in accordance with ASC 470 “Debt”.

Pursuant to the CARES Act, the loans may be forgiven, and during Fiscal 2022, the PPP Loans were forgiven, in their entirety, in accordance with guidelines set forth in the PPP Loan Agreement.

In accordance with the CARES Act, the federal government reserves the right to audit any forgiveness of PPP Loan’s for a period of six years from the date of forgiveness, and it has indicated that it intends to audit loans that were in excess of $2 million.

NOTE 10 - Stock Options

The Company follows ASC 718 (“Share-Based Payment”), which requires that all share-based payments to employees, including stock options, be recognized as compensation expense in the consolidated financial statements based on their fair values and over the requisite service period.

For the three months ended December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $ 386,000 ($ 0.01 per basic and diluted share) and $ 335,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

For the six months ended December 31, 2024 and 2023, the Company recorded non-cash compensation expense of $ 757,000 ($ 0.02 per basic and diluted share) and $ 610,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

For the three months ended March 31, 2025 and 2024, the Company recorded non-cash compensation expense of $ 386,000 ($ 0.01 per basic and diluted share) and $ 266,000 ($ 0.01 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

For the nine months ended March 31, 2025 and 2024, the Company recorded non-cash compensation expense of $ 1,143,000 ($ 0.03 per basic and diluted share) and $ 876,000 ($ 0.02 per basic and diluted share), respectively, relating to stock-based compensation which are included in SG&A in the consolidated statements of income.

2012 Employee Stock Option Plan

5 unchanged sentences

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2024, 361,036 stock options were outstanding, 265,660 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Employee Plan for the six months ended December 31:

At March 31, 2025, 361,036 stock options were outstanding, 265,660 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Employee Plan for the nine months ended March 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

A total of 2,000 stock options were exercised during both the six months ended December 31, 2024.

There were no stock options exercised during the three months ended December 31, 2024.

$ 54,000 cash was received from the option exercises during the six months ended December 31, 2024.

The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2024 was $ 0 .

A total of 31,600 stock options were exercised during both the three and six months ended December 31, 2023.

The 31,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 20,567 from the shares issuable on exercise of the options.

No stock options were exercised during the three months ended March 31, 2025.

A total of 2,000 stock options were exercised during the nine months ended March 31, 2025.

$ 54,000 cash was received from the option exercises during the nine months ended March 31, 2025.

The actual tax benefit realized for the tax deductions from option exercises during the nine months ended March 31, 2025 was $ 0 .

A total of 115,944 and 147,544 stock options were exercised during the three and nine months ended March 31, 2024.

77,944 of the 115,944 options that were exercised during the three months ended March 31, 2024 were settled by the Company withholding 26,002 from the shares issuable on exercise of the options.

109,544 of the 147,544 options that were exercised during the nine months ended March 31, 2024 were settled by the Company withholding 46,570 from the shares issuable on exercise of the options.

The withheld shares of common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

No cash was received from the option exercises during both the three and six months ended December 31, 2023.

The actual tax benefit realized for the tax deductions from option exercises during both the three and six months ended December 31, 2023 was $ 52,000 .

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at December 31, 2024:

For the remaining 38,000 stock options exercised during the three and nine months ended March 31, 2024.

$ 427,000 cash was received from the option exercises.

The actual tax benefit realized for the tax deductions from option exercises during both the three and nine months ended March 31, 2024 was $ 67,000 and $ 119,000 .

The following table summarizes information about stock options outstanding under the 2012 Employee Plan at March 31, 2025:

Options outstanding

8 unchanged sentences

$ 10.02 ‑ $ 26.94

As of December 31, 2024, there was $ 677,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

67,600 and 76,700 options vested during the three and six months ended December 31, 2024.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2024 was $ 670,000 and $ 782,000 , respectively.

74,000 and 84,700 options vested during the three and six months ended December 31, 2023.

The total grant date fair value of the options vesting during the three and six months ended December 31, 2023 was $ 724,000 and $ 849,000 , respectively.

As of March 31, 2025, there was $ 468,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Employee Plan.

0 and 76,700 options vested during the three and nine months ended March 31, 2025.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2025 was $ 0 and $ 782,000 , respectively.

5,200 and 89,900 options vested during the three and nine months ended March 31, 2024.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 was $ 33,000 and $ 881,000 , respectively.

2012 Non-Employee Stock Option Plan

4 unchanged sentences

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2024, 20,400 stock options were outstanding, 18,480 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Non-Employee Plan for the six months ended December 31:

At March 31, 2025, 20,400 stock options were outstanding, 18,480 stock options were exercisable and no further stock options were available for grant under this plan after December 2022.

The following table reflects activity under the 2012 Non-Employee Plan for the nine months ended March 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No stock options were exercised during the three and six months ended December 31, 2024 and 2023, respectively.

No cash was received from option exercises during the three and six months ended December 31, 2024 and 2023, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at December 31, 2024:

No stock options were exercised during the three and nine months ended March 31, 2025 and 2024, respectively.

No cash was received from option exercises during the three and nine months ended March 31, 2025 and 2024, respectively, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2012 Non-Employee Plan at March 31, 2025:

Options outstanding

6 unchanged sentences

$ 4.35 - $ 22.93

As of December 31, 2024, there was $ 15,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

1,920 options vested during both the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $ 19,000 .

As of March 31, 2025, there was $ 10,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2012 Non-Employee Plan.

0 and 1,920 options vested during the three and nine months ended March 31, 2025, respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2025 was $ 0 and $ 19,000 , respectively.

720 and 2,640 options vested during the three and nine months ended March 31, 2024, respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 under this plan was $ 5,000 and 24,000 , respectively.

2018 Non-Employee Stock Option Plan

4 unchanged sentences

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2024, 64,900 stock options were outstanding, 62,200 stock options were exercisable and 4,000 further stock options were available for grant under this plan.

There were no options granted during the six months ended December 31, 2024 and 2023.

At March 31, 2025, 64,900 stock options were outstanding, 62,200 stock options were exercisable and 4,000 further stock options were available for grant under this plan.

There were no options granted during the nine months ended March 31, 2025 and 2024.

No options may be granted under this plan after December 2028.

The following table reflects activity under the 2018 Non-Employee Plan for the six months ended December 31:

The following table reflects activity under the 2018 Non-Employee Plan for the nine months ended March 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No stock options were exercised during both the three and six months ended December 31, 2024.

No cash was received from option exercises during both the three and six months ended December 31, 2024, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

A total of 1,600 stock options were exercised during the three and six months ended December 31, 2023.

The 1,600 options that were exercised during the three and six months ended December 31, 2023 were settled by the Company withholding 740 from the shares issuable on exercise of the options.

No stock options were exercised during both the three and nine months ended March 31, 2025.

No cash was received from option exercises during both the three and nine months ended March 31, 2025, and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

A total of 1,500 and 3,100 stock options were exercised during the three and nine months ended March 31, 2024, respectively.

The 1,500 options that were exercised during the three months ended March 31, 2024 were settled by the Company withholding 792 from the shares issuable on exercise of the options.

The 3,100 options that were exercised during the nine months ended March 31, 2024 were settled by the Company withholding 1,532 from the shares issuable on exercise of the options.

The withheld shares of Common Stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

No cash was received from the option exercises during the three and six months ended December 31, 2023.

The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2023 was $ 6,000 each period.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at December 31, 2024:

No cash was received from the option exercises during the three and nine months ended March 31, 2024.

The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2024 was $ 6,000 and $ 12,000 , respectively.

The following table summarizes information about stock options outstanding under the 2018 Non-Employee Plan at March 31, 2025:

Options outstanding

6 unchanged sentences

$ 8.10 - $ 22.93

As of December 31, 2024, there was $ 20,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

2,700 options vested during both the three and six months ended December 31, 2024.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 was $ 27,000 .

9,500 options vested during both the three and six months ended December 31, 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2023 under this plan was $ 89,000 for both periods.

As of March 31, 2025, there was $ 14,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2018 Non-Employee Plan.

0 and 2,700 options vested during both the three and nine months ended March 31, 2025, respectively.

The total grant date fair value of the options vesting during both the three and nine months ended March 31, 2025 was $ 0 and $ 27,000 .

5,380 and 14,880 options vested during the three and nine months ended March 31, 2024, respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2024 under this plan was $ 35,000 and $ 124,000 , respectively.

2020 Non-Employee Stock Option Plan

3 unchanged sentences

Under the 2020 Non-Employee Plan, stock options may be granted with a term of up to 10 years at an exercise price equal to or greater than the fair market value on the date of grant and are exercisable in whole or in part at 20 % per year beginning on the date of grant.

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2024, 51,900 stock options were outstanding, 37,520 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options were granted during the six months ended December 31, 2024 and 2023, respectively.

option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At March 31, 2025, 51,900 stock options were outstanding, 38,520 stock options were exercisable and 45,100 stock options were available for grant under this plan.

No options were granted during the nine months ended March 31, 2025 and 2024, respectively.

No options may be granted under this plan after May 2030.

The following table reflects activity under the 2020 Non-Employee Plan for the six months ended December 31:

The following table reflects activity under the 2020 Non-Employee Plan for the nine months ended March 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

A total of 0 and 3,000 stock options were exercised during the three and six months ended December 31, 2024, respectively.

3,000 stock options exercised during the six months ended December 31, 2024 were settled by the company withholding 2,151 shares from the shares issuable on exercise of the options.

A total of 0 and 3,000 stock options were exercised during the three and nine months ended March 31, 2025, respectively.

3,000 stock options exercised during the nine months ended March 31, 2025 were settled by the company withholding 2,151 shares from the shares issuable on exercise of the options.

The withheld shares of common stock had an aggregate fair market value on the date of exercise equal to the purchase price being paid.

The actual tax benefit realized for the tax deductions from option exercises during the three and six months ended December 31, 2024 was $ 0 and $ 7,000 , respectively.

No stock options were exercised during both the three and six months ended December 31, 2023.

No cash was received from option exercises during either of the three and six months ended December 31, 2023 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at December 31, 2024:

The actual tax benefit realized for the tax deductions from option exercises during the three and nine months ended March 31, 2025 was $ 0 and $ 7,000 , respectively.

No stock options were exercised during both the three and nine months ended March 31, 2024.

No cash was received from option exercises during either of the three and nine months ended March 31, 2024 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 for both periods.

The following table summarizes information about stock options outstanding under the 2020 Non-Employee Plan at March 31, 2025:

Options outstanding

8 unchanged sentences

$ 11.40 - $ 30.71

As of December 31, 2024, there was $ 137,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

3,380 and 10,380 options vested during both of the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 was $ 34,000 and $ 113,000 , respectively.

As of March 31, 2025, there was $ 111,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2020 Non-Employee Plan.

1,000 and 11,380 options vested during both of the three and nine months ended March 31, 2025 and 2024, respectively.

The total grant date fair value of the options vesting during both the three and nine months ended March 31, 2025 and 2024 was $ 16,000 and $ 129,000 , respectively.

2022 Employee Stock Option Plan

5 unchanged sentences

An option granted under this plan shall vest in full upon a “change in control” as defined in the plan.

At December 31, 2024, 130,000 stock options were outstanding, 28,000 stock options were exercisable and 820,000 stock options were available for grant under this plan.

No stock options were granted during the six months ended December 31, 2024.

There were 10,000 options granted during the three and six months ended December 31, 2023.

At March 31, 2025, 130,000 stock options were outstanding, 28,000 stock options were exercisable and 820,000 stock options were available for grant under this plan.

No stock options were granted during the nine months ended March 31, 2025.

No stock options were granted during the three months ended March 31, 2024.

There were 10,000 options granted during the nine months ended March 31, 2024.

No options may be granted under this plan after December 2032.

4 unchanged sentences

Expected dividend yields

The following table reflects activity under the 2022 Employee Plan for the six months ended December 31:

The following table reflects activity under the 2022 Employee Plan for the nine months ended March 31:

Weighted average

10 unchanged sentences

Total intrinsic value of options exercisable

No options were exercised during both the three and six months ended December 31, 2024 and 2023, respectively.

No cash was received from option exercises during both the three and six months ended December 31, 2024 and 2023 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at December 31, 2024:

No options were exercised during both the three and nine months ended March 31, 2025 and 2024, respectively.

No cash was received from option exercises during both the three and nine months ended March 31, 2025 and 2024 and the actual tax benefit realized for the tax deductions from option exercises was $ 0 .

The following table summarizes information about stock options outstanding under the 2022 Employee Plan at March 31, 2025:

Options outstanding

8 unchanged sentences

$ 21.60 - $ 49.39

As of December 31, 2024, there was $ 1,816,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan.

2,000 options vested during both the three and six months ended December 31, 2024 and 2023, respectively.

The total grant date fair value of the options vesting during both the three and six months ended December 31, 2024 and 2023 under this plan was $ 19,500 , respectively.

As of March 31, 2025, there was $ 1,676,000 of unearned stock-based compensation cost related to share-based compensation arrangements granted under the 2022 Employee Plan.

0 and 2,000 options vested during the three and nine months ended March 31, 2025 and 2024, respectively.

The total grant date fair value of the options vesting during the three and nine months ended March 31, 2025 and 2024 under this plan was $ 19,500 , respectively.

NOTE 11 – Stockholders’ Equity Transactions

The following tables summarizes information about dividends declared by the Company for the six months ended December 31, 2024 and the fiscal year ended June 30, 2024:

The following tables summarizes information about dividends declared by the Company for the nine months ended March 31, 2025 and the fiscal year ended June 30, 2024:

Dividend Declaration Date

2 unchanged sentences

Per Share Cash Dividend Amount

January 30, 2025

March 12, 2025

April 3, 2025

November 1, 2024

20 unchanged sentences

During the second quarter of the fiscal year ended June 30, 2025, the Company repurchased 282,647 shares of its outstanding common stock at a weighted average price of $ 37.95 .

Shares repurchased through the six months ended December 31, 2024, are included in the Company’s Treasury Stock as of December 31, 2024.

During the third quarter of the fiscal year ended June 30, 2025, the Company repurchased 745,000 shares of its outstanding common stock at a weighted average price of $ 25.22 .

Shares repurchased through the nine months ended March 31, 2025, are included in the Company’s Treasury Stock as of March 31, 2025.

The Company currently has available 359,741 shares that can be repurchased under this authorization.

The following tables summarizes information about shares repurchased by the Company for the six months ended December 31, 2024:

The following tables summarizes information about shares repurchased by the Company for the nine months ended March 31, 2025:

Total Number of

8 unchanged sentences

November 7, 2024 - December 19, 2024

Total for the 6 months ended December 31, 2024

During the six months ended December 31, 2024, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares.

February 6, 2025 - March 20, 2025

Total for the 9 months ended March 31, 2025

During the nine months ended March 31, 2025, certain employees and directors exercised stock options under the Company's 2012 Employee and 2020 Non-Employee Stock Option Plans totaling 5,000 shares.

Of the 5,000 shares exercised, 3,000 of these exercises were completed as cashless exercises as allowed for under the plans, where the exercise shares are issued by the Company in exchange for shares of the Company's common stock that are owned by the optionees.

The number of shares withheld by the Company was 2,151 and was based upon the aggregate fair market value on the date of exercise equal to the purchase price being paid.

There were no stock option exercises from certain employees and directors during the three months ended December 31, 2024.

There were no stock option exercises from certain employees and directors during the three months ended March 31, 2025.

NOTE 12 - 401(k) Plan

1 unchanged sentence

employees and is qualified under Sections 401(a) and 401(k) of the Internal Revenue Code.

Company contributions to this plan are discretionary and totaled $ 69,000 and $ 58,000 for the three months ended December 31, 2024 and 2023, respectively.

Company contributions to this plan are discretionary and totaled $ 138,000 and $ 119,000 for the six months ended December 31, 2024 and 2023, respectively.

Company contributions to this plan are discretionary and totaled $ 73,000 and $ 72,000 for the three months ended March 31, 2025 and 2024, respectively.

Company contributions to this plan are discretionary and totaled $ 211,000 and $ 191,000 for the nine months ended March 31, 2025 and 2024, respectively.

NOTE 13 - Commitments and Contingencies

5 unchanged sentences

Operating leases are included in operating lease right-of-use assets, accrued expenses and operating lease liabilities, non-current on our condensed consolidated balance sheets.

For the three months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $ 115,000 and $ 86,000 , respectively.

For the six months ended December 31, 2024 and 2023 cash payments against operating lease liabilities totaled $ 172,000 and $ 171,000 , respectively.

For the three months ended March 31, 2025 and 2024 cash payments against operating lease liabilities totaled $ 86,000 and $ 57,000 , respectively.

For the nine months ended March 31, 2025 and 2024 cash payments against operating lease liabilities totaled $ 258,000 and $ 228,000 , respectively.

Supplemental balance sheet information related to operating leases was as follows:

1 unchanged sentence

Weighted-average discount rate

The following is a schedule, by years, of maturities of lease liabilities as of December 31, 2024 (in thousands):

The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2025 (in thousands):

Year Ending June 30,

1 unchanged sentence

Imputed interest

Operating lease expense totaled approximately $ 144,000 and $ 129,000 for the three months ended December 31, 2024 and 2023, respectively.

Operating lease expense totaled approximately $ 239,000 and $ 253,000 for the six months ended December 31, 2024 and 2023, respectively.

Operating lease expense totaled approximately $ 124,000 and $ 127,000 for the three months ended March 31, 2025 and 2024, respectively.

Operating lease expense totaled approximately $ 363,000 and $ 380,000 for the nine months ended March 31, 2025 and 2024, respectively.

On August 29, 2023, a purported class action, brought on behalf of a putative class who acquired publicly traded NAPCO securities between November 7, 2022 and August 18, 2023, was filed in the United States District Court for the Eastern District of New York against the Company, its Chairman and Chief Executive Officer, and its Chief Financial Officer.

1 unchanged sentence

NAPCO Security Technologies, Inc.

et al., asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in the Company’s quarterly reports and earnings releases during the period of November 7, 2022 through May 8, 2023.

et al., asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in the Company’s quarterly reports and earnings releases during the period of November 7, 2022 through May 8, 2023.

A lead plaintiff was appointed in November 2023 and lead plaintiff filed an Amended Complaint on February 16, 2024.

2 unchanged sentences

The Company filed a motion to dismiss the Amended Complaint on April 26, 2024.

On April 11, 2025, the Court granted in part and denied in part the motion to dismiss.

The Section 11 and Section 12 claims brought against the individual defendants were dismissed;

the remaining claims survived the motion to dismiss.

The Company intends to vigorously defend against the action.

6 unchanged sentences

The Company’s status as a “Nominal Defendant” in the action reflects the fact that the lawsuit is maintained by the named plaintiff on behalf of the Company and that the plaintiff seeks damages on the Company’s behalf.

Defendants’ motion to dismiss and/or stay the case is due on February 28, 2025.

Defendants believe that there are substantial defenses to the claims asserted and filed a motion to dismiss and/or stay the case on February 28, 2025.

Plaintiff must file an opposition to Defendants’ motion or amend her complaint on or before June 12, 2025.

On March 31, 2025, the Company received a subpoena from the Securities and Exchange Commission (“SEC”).

The SEC’s subpoena and inquiry is principally focused on the Company’s previously disclosed restatements and related material weakness determination.

The Company has produced, and will continue to produce documents, responsive to the SEC subpoena.

On April 25, 2025, a purported class action, brought on behalf of a putative class who acquired publicly traded NAPCO securities between February 5, 2024 and February 3, 2025, was filed in the United States District Court for the Eastern District of New York against the Company, its Chairman and Chief Executive Officer, and its Chief Financial Officer.

The action, captioned Patel v.

NAPCO Security Technologies, Inc.

et al., asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 in connection with statements made in quarterly earnings releases and calls during the period of February 5, 2024 through February 3, 2025.

The Company intends to vigorously defend against the action.

With respect to all litigation and related matters, the Company records a liability when the Company believes it is probable that a liability has been incurred and the amount can be reasonably estimated.

As of the end of the period covered by this report, the Company has not recorded a liability for the matter disclosed in this note.

As of the end of the period covered by this report, the Company has not recorded a liability for the matters disclosed in this note.

It is possible that the Company could be required to pay damages, incur other costs or establish accruals in amounts that could not be reasonably estimated as of the end of the period covered by this report.

3 unchanged sentences

The employment agreement with the CEO provides for an annual salary of $ 980,000 , as adjusted for inflation;

incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299 % of the average of the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement.

incentive compensation as may be approved by the Board of Directors from time to time and a termination payment in an amount up to 299 % of the average of

the prior five calendar year’s compensation, subject to certain limitations, as defined in the agreement.

The employment agreement renews annually in August unless either party gives the other notice of non-renewal at least six months prior to the end of the applicable term.

1 unchanged sentence

Upon the anniversary date, if terminated by the Company without cause, the SVP of Finance is entitled to severance of six months’ salary and continued company-sponsored health insurance for six months from the date of termination.

The employment agreement with the SVP of Engineering expires in August 2026 and provides for an annual salary of $ 458,000 , and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

The employment agreement with the EVP of Engineering expires in August 2026 and provides for an annual salary of $ 458,000 , and, if terminated by the Company without cause, severance of nine month’s salary and continued company-sponsored health insurance for six months from the date of termination.

The severance agreement is with the President and CFO and provides for, if terminated by the Company without cause or within three months of a change in corporate control of the Company, severance of nine month’s salary, continued company-sponsored health insurance for six months from the date of termination and certain non-compete and other restrictive provisions.

7 unchanged sentences

Financial Information Relating to Domestic and Foreign Operations (in thousands):

Three months ended December 31,

Six months ended December 31,

Three months ended March 31,

Nine months ended March 31,

Sales to external customers (1) :

Total Net Sales

December 31, 2024

March 31, 2025

June 30, 2024

5 unchanged sentences

There were no sales into any one foreign country in excess of 10% of total Net Sales.

(2) Consists primarily of inventories (December 31, 2024 = $ 31,864 ;

June 30, 2024 = $ 33,584 ), operating lease right of use (December 31, 2024 = $ 5,335 ;

June 30, 2024 = $ 5,487 ) and fixed assets (December 31, 2024 = $ 4,312 ;

(2) Consists primarily of inventories (March 31, 2025 = $ 30,790 ;

June 30, 2024 = $ 33,584 ), operating lease right of use (March 31, 2025 = $ 5,261 ;

June 30, 2024 = $ 5,487 ) and fixed assets (March 31, 2025 = $ 4,112 ;

June 30, 2024 = $ 3,623 ) located at the Company’s principal manufacturing facility in the Dominican Republic.

1 unchanged sentence

The Company has evaluated subsequent events occurring after the end of the period covered by the condensed consolidated financial statements for events requiring recording or disclosure in the condensed consolidated financial statements.

On January 30, 2025 , the Company’s Board of Directors declared a cash dividend of $ .125 per share payable on April 3, 2025 to stockholders of record on March 12, 2025 .

On May 2, 2025 , the Company’s Board of Directors declared a cash dividend of $ .14 per share payable on July 3, 2025 to stockholders of record on June 12, 2025 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements